Stocks continue December drop

The stock market continued its sluggish start to the month on Wednesday.

The Standard & Poor's 500 index closed lower for the fourth straight day, its longest losing streak in more than two months.

After surging this year, stocks have had a slow start to December, statistically one of the strongest months for the market. The S& P 500 index has dropped 0.7 percent so far, paring its annual gain to 25.7 percent. The big gains have left some investors nervous about adding to their holdings, lest they buy at the peak in the market.

“There's some general angst about whether the market is overvalued and when is it going to come back down,” said Bob Gavlak, a wealth adviser for Strategic Wealth Partners

Sears was among the biggest losers on Wednesday.

The stock fell $4.63, or 8.3 percent, to $50.92 after the company's CEO, billionaire hedge-fund manager Eddie Lampert, reduced his stake in the department store chain to less than half.

The Dow fell 24.85 points, or 0.2 percent, to 15,889.77. The S& P 500 index fell 2.34 points, or 0.1 percent, to 1,792.81. The Nasdaq composite edged up 0.80 point to 4,038.

As stocks slumped, the yield on the 10-year Treasury note rose to its highest level in more than two months.

The yield on the 10-year note climbed to 2.84 percent from 2.78 percent on Tuesday, resuming its upward trajectory on signs that the economy is maintaining its recovery.

In September the yield climbed as high as 3 percent amid speculation that the Fed was set to announce that it would cut back on its economic stimulus.

Investors are following Treasury rates closely because they are used as a benchmark for setting many kinds of borrowing rates.

However, it will be the speed at which interest rates climb, rather than the absolute level that they reach, that will be crucial for the economy and the stock market, said Quincy Krosby, a market strategist at Prudential Financial.

The stock market has had an outstanding year. The Dow and the S& P 500 index have climbed to record levels. The only two months when the stock market declined both occurred when investors thought the Fed was poised to ease back on its stimulus.

While higher rates will push up borrowing costs, stock investors should welcome the end of stimulus because it shows the economy is strengthening, said Doug Cote, chief market strategist at ING Investment Management.